The links to your tags have a flaw: they miss a slash between blog and tag.What kind of mod_rewrite did you choose? Did you create your own tag links or did you use the required tag templates for it?What happens when you do not use mod_rewrite?Does this problem also occur when using the default delivered weblog?

Quality is in the detail of things............

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This isn't related to tags (or mod_rewrite) - none of the links to archives, categories or tags work in the right menu.

The problem is that the root URL is missing an ending slash - see the "URL to Weblog" setting. PS! There is a warning for this setting: "Leave this field blank, unless you know what you are doing. If left empty, PivotX will automatically determine the URL of your weblog, which is usually the best option. Normally this setting is only used if you want one directory for each weblog."